Secured Lending On The Rise Despite Stagnant Mortgage Market

Secured Lending On The Rise Despite Stagnant Mortgage Market

Clock  2 minute read

Carl Shave Carl Shave | August 6, 2014


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Last month we reported on June’s apparent mortgage approvals “bounce back” but didn’t hold out too much hope for a return to pre-credit crunch levels any time in the near future. In fact, with affordability checks becoming increasingly rigorous and the Bank of England imposing even tighter regulations, it’s not likely that mortgages will truly loosen up any time soon.

Yet there is one type of finance available to home owners which is becoming increasingly accessible and increasingly popular with both borrowers and financial advisers. Secured loans have risen by 32.8% over the first half of 2014, with borrowing now £75 million higher than in the first half of 2013.

Secured loans buck cautious lending trend

Secured loans have been growing in popularity and availability for 31 consecutive months now, but it was not until June 2014 that they reached these high pre-credit crunch levels when gross lending hit £51 million.

FCA gives industry credibility

This second charge product (which lends against existing assets such as houses or cars) came under the regulation of the FCA (Financial Conduct Authority) in April 2014 and has since enjoyed greater credibility and a bolstered reputation.

Previously regarded as an “outsider” financial product, the FCA’s new role in the sector has given financial companies confidence and encouraged many reputable mortgage providers to open up to offering secured loans.

In fact, the FCA have even gone so far as to condone secured loans as an alternative for borrowers who are worried about predicted mortgage interest rate rises over the next few years.

While this product is not for everyone, the FCA believe that it is the responsibility of good financial advisers to at least discuss the possibility of ring-fencing existing mortgages and using a secured loan (which benefits from a much lower interest rate and better accessibility) for any additional borrowing needs.

Good news for bad credit

The growing positive reputation of the secured loans market is especially good news for mortgage and finance seekers who struggle with a poor credit report or negative credit history. With loans secured against existing assets, approval rates are much higher, making this product much more accessible than adverse credit mortgages.

Keen to learn more about the secured loan boom? Just Bad Credit’s team of experienced advisers can provide the information you need to make an educated choice about your financial future. Call our helpful team today on freephone 0800 9777840.


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